Authorizes Internet wagering at Atlantic City casinos
under certain circumstances.

CURRENT VERSION OF TEXT

As introduced.

An Act authorizing Internet wagering at Atlantic City
casinos under certain circumstances and amending and supplementing the
"Casino Control Act", P.L.1977, c.110 (C.5:12-1 et seq.).

Be It Enactedby the Senate and General Assembly of
the State of New Jersey:

1. Section 5 of P.L.1977,
c.110 (C.5:12-5) is amended to read as follows:

5. "Authorized
Game" or "Authorized Gambling Game"-- [Roulette]Poker, roulette, baccarat, blackjack, craps, big six wheel, slot
machines, minibaccarat, red dog, pai gow, and sic bo; any variations or
composites of such games, provided that such variations or composites, and
any above listed game or variation or composite of such game to be offered
through Internet wagering, are found by the division suitable for use after
an appropriate test or experimental period under such terms and conditions as
the division may deem appropriate; and any other game which is determined by
the division to be compatible with the public interest and to be suitable for
casino use after such appropriate test or experimental period as the division
may deem appropriate. "Authorized game" or "authorized gambling
game" includes gaming tournaments in which players compete against one
another in one or more of the games authorized herein or by the division or in
approved variations or composites thereof if the tournaments are authorized by
the division.

(cf: P.L.2011, c.19, s.4)

2. Section 6 of P.L.1977,
c.110 (C.5:12-6) is amended to read as follows:

6. "Casino" or
"casino room" or "licensed casino" -- One or more locations
or rooms in a casino hotel facility that have been approved by the division for
the conduct of casino gaming in accordance with the provisions of this act,
including any part of the facility where Internet wagering is conducted.
"Casino" or "casino room" or "licensed casino"
shall not include any casino simulcasting facility authorized pursuant to the
"Casino Simulcasting Act," P.L.1992, c.19 (C.5:12-191 et seq.).

(cf: P.L.2011, c.19, s.6)

3. (New section) “Internet
wagering" means the placing of wagers with a casino licensee at a casino
located in Atlantic City using a computer network of both federal and
non-federal interoperable packet switched data networks through which the
casino licensee may offer authorized games to residents of this State
who have established a wagering account with the casino licensee and who are
physically present in this State when placing a wager.

4. (New section) “Internet
wagering gross revenue” means the total of all sums actually received by a
casino licensee from Internet wagering operations, less only the total of all
sums actually paid out as winnings to patrons; provided, however, that the cash
equivalent value of any merchandise or thing of value included in a jackpot or
payout shall not be included in the total of all sums paid out as winnings to players
for purposes of determining Internet wagering gross revenue.

5. Section 3 of P.L.1987,
c.353 (C.5:12-43.1) is amended to read as follows:

3. "Restricted Casino
Areas"--The cashier's cage, the soft count room, the hard count room, the
slot cage booths and runway areas, the interior of table game pits, the surveillance
room and catwalk areas, the slot machine repair room, any room or area
related to Internet wagering operations and any other area specifically
designated by the division as restricted in a licensee's operation certificate.

(cf: P.L.2011, c.19, s.21)

6. Section 100 of P.L.1977,
c.110 (C.5:12-100) is amended to read as follows:

100. a. This act shall not be
construed to permit any gaming except the conduct of authorized games in a
casino room or through Internet wagering in accordance with this act and
the regulations promulgated hereunder and in a simulcasting facility to the
extent provided by the "Casino Simulcasting Act," P.L.1992, c.19
(C.5:12-191 et al.). Notwithstanding the foregoing, if the division approves
the game of keno as an authorized game pursuant to section 5 of P.L.1977, c.110
(C.5:12-5), as amended, keno tickets may be sold or redeemed in accordance with
division regulations.

b. Gaming equipment shall
not be possessed, maintained or exhibited by any person on the premises of a casino
hotel except in a casino room, in the simulcasting facility, or in restricted
casino areas used for the inspection, repair or storage of such equipment and
specifically designated for that purpose by the casino licensee with the
approval of the division. Gaming equipment which supports the conduct of gaming
in a casino or simulcasting facility or through Internet wagering but
does not permit or require patron access, such as computers, or gaming
software or other gaming equipment used to conduct Internet wagering may be
possessed and maintained by a casino licensee or a qualified holding or
intermediary company of a casino licensee in restricted areas specifically
approved by the division. No gaming equipment shall be possessed, maintained,
exhibited, brought into or removed from a casino room or simulcasting facility
by any person unless such equipment is necessary to the conduct of an
authorized game, has permanently affixed, imprinted, impressed or engraved
thereon an identification number or symbol authorized by the division, is under
the exclusive control of a casino licensee or casino licensee's employees, or
of any individually qualified employee of a holding company or casino licensee
and is brought into or removed from the casino room or simulcasting facility
following 24-hour prior notice given to an authorized agent of the division.

Notwithstanding any other
provision of this section, computer equipment used by the slot system operator
of a multi-casino progressive slot system to link and communicate with the slot
machines of two or more casino licensees for the purpose of calculating and
displaying the amount of a progressive jackpot, monitoring the operation of the
system, and any other purpose that the division deems necessary and appropriate
to the operation or maintenance of the multi-casino progressive slot machine
system may, with the prior approval of the division, be possessed, maintained
and operated by the slot system operator either in a restricted area on the
premises of a casino hotel or in a secure facility inaccessible to the public
and specifically designed for that purpose off the premises of a casino hotel
but within the territorial limits of Atlantic County, New Jersey.

Notwithstanding the foregoing,
a person may, with the prior approval of the division and under such terms and
conditions as may be required by the division, possess, maintain or exhibit
gaming equipment in any other area of the casino hotel, provided that such
equipment is used for nongaming purposes.

c. Each casino hotel shall
contain a count room and such other secure facilities as may be required by the
division for the counting and storage of cash, coins, tokens, checks, plaques,
gaming vouchers, coupons, and other devices or items of value used in wagering and
approved by the division that are received in the conduct of gaming and for the
inspection, counting and storage of dice, cards, chips and other
representatives of value. The division shall promulgate regulations for the
security of drop boxes and other devices in which the foregoing items are
deposited at the gaming tables or in slot machines, and all areas wherein such
boxes and devices are kept while in use, which regulations may include certain
locking devices. Said drop boxes and other devices shall not be brought into or
removed from a casino room or simulcasting facility, or locked or unlocked,
except at such times, in such places, and according to such procedures as the
division may require.

d. All chips used in gaming
shall be of such size and uniform color by denomination as the division shall
require by regulation.

e. All gaming shall be
conducted according to rules promulgated by the division. All wagers and
pay-offs of winning wagers shall be made according to rules promulgated by the
division, which shall establish such limitations as may be necessary to assure
the vitality of casino operations and fair odds to patrons. Each slot machine
shall have a minimum payout of 83%.

f. Each casino licensee
shall make available in printed form to any patron upon request the complete
text of the rules of the division regarding games and the conduct of gaming,
pay-offs of winning wagers, an approximation of the odds of winning for each
wager, and such other advice to the player as the division shall require. Each
casino licensee shall prominently post within a casino room and simulcasting
facility, as appropriate, according to regulations of the division such
information about gaming rules, pay-offs of winning wagers, the odds of winning
for each wager, and such other advice to the player as the division shall
require.

g. Each gaming table shall
be equipped with a sign indicating the permissible minimum and maximum wagers
pertaining thereto. Each game offered through Internet wagering shall
display online the permissible minimum and maximum wagers pertaining thereto.
It shall be unlawful for a casino licensee to require any wager to be greater
than the stated minimum or less than the stated maximum; provided, however,
that any wager actually made by a patron and not rejected by a casino licensee
prior to the commencement of play shall be treated as a valid wager.

h. (1) Except as herein
provided, no slot machine shall be used to conduct gaming unless it is
identical in all electrical, mechanical and other aspects to a model thereof
which has been specifically tested and licensed for use by the division. The
division shall also test any other gaming device, gaming equipment,
gaming-related device or gross-revenue related device, such as a slot
management system, electronic transfer credit system or gaming voucher system
as it deems appropriate. In its discretion and for the purpose of expediting
the approval process, the division may utilize the services of a private
testing laboratory that has obtained a plenary license as a casino service
industry enterprise pursuant to subsection a. of section 92 of P.L.1977, c.110
(C.5:12-92) to perform the testing, and may also utilize applicable data from
any such private testing laboratory or from a governmental agency of a state
other than New Jersey authorized to regulate slot machines and other gaming
devices, gaming equipment, gaming-related devices and gross-revenue related
devices used in casino gaming, if the private testing laboratory or
governmental agency uses a testing methodology substantially similar to the
methodology utilized by the division. The division, in its discretion, may rely
upon the data provided by the private testing laboratory or governmental agency
and adopt the conclusions of such private testing laboratory or governmental
agency regarding any submitted device.

(2) Except as otherwise
provided in paragraph (5) of subsection h. of this section, the division shall,
within 60 days of its receipt of a complete application for the testing of a slot
machine or other gaming equipment model, approve or reject the slot machine or
other gaming equipment model. In so doing, the division shall specify whether
and to what extent any data from a private testing laboratory or governmental
agency of a state other than New Jersey was used in reaching its conclusions
and recommendation. If the division is unable to complete the testing of a slot
machine or other gaming equipment model within this 60-day period, the division
may conditionally approve the slot machine or other gaming equipment model for
test use by a casino licensee provided that the division represents that the
use of the slot machine or other gaming equipment model will not have a direct
and materially adverse impact on the integrity of gaming or the control of
gross revenue. The division shall give priority to the testing of slot machines
or other gaming equipment which a casino licensee has certified it will use in
its casino in this State.

(3) The division shall, by
regulation, establish such technical standards for licensure of slot machines,
including mechanical and electrical reliability, security against tampering,
the comprehensibility of wagering, and noise and light levels, as it may deem
necessary to protect the player from fraud or deception and to insure the
integrity of gaming. The denominations of such machines shall be set by the
licensee; the licensee shall simultaneously notify the division of the
settings.

(4) The division shall, by
regulation, determine the permissible number and density of slot machines in a
licensed casino so as to:

(d) create and maintain a
gracious playing environment in the casino; and

(e) encourage and preserve
competition in casino operations by assuring that a variety of gaming
opportunities is offered to the public.

Any such regulation
promulgated by the division which determines the permissible number and density
of slot machines in a licensed casino shall provide that all casino floor space
and all space within a casino licensee's casino simulcasting facility shall be
included in any calculation of the permissible number and density of slot
machines in a licensed casino.

(5) Any new gaming equipment
or simulcast wagering equipment that is submitted for testing to the division
or to an independent testing laboratory licensed pursuant to subsection a. of
section 92 of P.L.1977, c.110 (C.5:12-92) prior to or simultaneously with
submission of such new equipment for testing in a jurisdiction other than New
Jersey, may, consistent with regulations promulgated by the division, be
deployed by a casino licensee on the casino floor 14 days after submission of
such equipment for testing. If the casino or casino service industry enterprise
licensee has not received approval for the equipment 14 days after submission
for testing, any interested casino licensee may, consistent with division
regulations, deploy the equipment on a field test basis, unless otherwise
directed by the director.

(6) All equipment used by
a licensee to conduct Internet wagering, including but not limited to
computers, servers, monitoring rooms, and hubs, shall be located, with the
prior approval of the division, either in a restricted area on the premises of
the casino hotel or in a secure facility inaccessible to the public and
specifically designed for that purpose off the premises of a casino hotel but
within the territorial limits of Atlantic City, New Jersey. All Internet
wagers shall be deemed to be placed when received in Atlantic City
by the licensee. Any intermediate routing of electronic data in connection
with a wager shall not affect the fact that the wager is placed in Atlantic
City.

No software, computer or
other gaming equipment shall be used to conduct Internet wagering unless it has
been specifically tested by the division. The division may, in its discretion,
and for the purpose of expediting the approval process, refer testing to any
testing laboratory with a plenary license as a casino service industry
enterprise pursuant to subsection a. of section 92 of P.L.1977, c.110
(C.5:12-92). The division shall give priority to the testing of software,
computers or other gaming equipment which a casino licensee has certified it
will use to conduct Internet wagering in this State. The division shall, by
regulation, establish such technical standards for approval of software,
computers and other gaming equipment used to conduct Internet wagering,
including mechanical, electrical or program reliability, security against
tampering, the comprehensibility of wagering, and noise and light levels, as it
may deem necessary to protect the player from fraud or deception and to insure
the integrity of gaming. When appropriate, the licensee shall set the
denominations of Internet games and shall simultaneously notify the commission
of the settings.

No software, computer or
other gaming equipment shall be used to conduct Internet wagering unless it is
able to verify that a player placing a wager is physically present in this
State at the time that the wager is placed. The division shall confirm on a
continuous basis that the equipment used by every licensee to conduct Internet
wagering is, in fact, verifying every player’s physical presence in this State
each time a wager is placed.

i. (Deleted by amendment,
P.L.1991, c.182).

j. (Deleted by amendment,
P.L.1991, c.182).

k. It shall be unlawful for
any person to exchange or redeem chips for anything whatsoever, except for
currency, negotiable personal checks, negotiable counter checks, other chips,
coupons, slot vouchers or complimentary vouchers distributed by the casino
licensee, or, if authorized by regulation of the division, a valid charge to a
credit or debit card account. A casino licensee shall, upon the request of any
person, redeem that licensee's gaming chips surrendered by that person in any
amount over $100 with a check drawn upon the licensee's account at any banking institution
in this State and made payable to that person.

l. It shall be unlawful
for any casino licensee or its agents or employees to employ, contract with, or
use any shill or barker to induce any person to enter a casino or simulcasting
facility or play at any game or for any purpose whatsoever.

m. It shall be unlawful for
a dealer in any authorized game in which cards are dealt to deal cards by hand
or other than from a device specifically designed for that purpose, unless
otherwise permitted by the rules of the division.

n. (1) It shall be
unlawful for any casino key employee, licensee or any person who is required to
hold a casino key employee license as a condition of employment or
qualification to wager in any casino or simulcasting facility in this State, or
any casino.

(2) It shall be unlawful for
any other employee of a casino licensee who, in the judgment of the division,
is directly involved with the conduct of gaming operations, including but not
limited to dealers, floor persons, box persons, security and surveillance
employees, to wager in any casino or simulcasting facility in the casino hotel
in which the employee is employed or in any other casino or simulcasting
facility in this State which is owned or operated by an affiliated licensee.

(3) The prohibition against
wagering set forth in paragraphs (1) and (2) of this subsection shall continue
for a period of 30 days commencing upon the date that the employee either
leaves employment with a casino licensee or is terminated from employment with
a casino licensee.

o. (1) It shall be unlawful
for any casino key employee or boxman, floorman, or any other casino employee
who shall serve in a supervisory position to solicit or accept, and for any
other casino employee to solicit, any tip or gratuity from any player or patron
at the casino hotel or simulcasting facility where he is employed.

(2) A dealer may accept tips
or gratuities from a patron at the table at which such dealer is conducting
play, subject to the provisions of this subsection. All such tips or gratuities
shall be immediately deposited in a lockbox reserved for that purpose, unless
the tip or gratuity is authorized by a patron utilizing an automated wagering
system approved by the division. All tips or gratuities shall be accounted for,
and placed in a pool for distribution pro rata among the dealers, with the
distribution based upon the number of hours each dealer has worked, except that
the division may, by regulation, permit a separate pool to be established for
dealers in the game of poker, or may permit tips or gratuities to be retained
by individual dealers in the game of poker.

(3) Notwithstanding the
provisions of paragraph (1) of this subsection, a casino licensee may require
that a percentage of the prize pool offered to participants pursuant to an
authorized poker tournament be withheld for distribution to the tournament
dealers as tips or gratuities as the division by regulation may approve.

p. Any slot system operator
that offers an annuity jackpot shall secure the payment of such jackpot by
establishing an annuity jackpot guarantee in accordance with the requirements
of P.L.1977, c.110 (C.5:12-1 et seq.), and the rules of the division.

(cf: P.L.2011, c.19, s.65)

7. Section 109 of P.L.1977,
c.110 (C.5:12-109) is amended to read as follows:

109. Notwithstanding any
provisions of this article, the director may issue an emergency order for the
suspension, limitation or conditioning of any operation certificate or any
license, other than a casino license, or any registration, or any permit to
conduct Internet wagering, or may issue an emergency order requiring the
licensed casino to keep an individual from the premises of such licensed casino
or from using or maintaining an Internet wagering account, or not to pay
such individual any remuneration for services or any profits, income or
accruals on his investment in such casino, in the following manner:

a. An emergency order
shall be issued only when the director finds that:

(1) There has been charged a
violation of any of the criminal laws of this State by a licensee or
registrant, or

(2) Such action is necessary
to prevent a violation of any such provision, or

(3) Such action is necessary
immediately for the preservation of the public peace, health, safety, morals,
good order and general welfare or to preserve the public policies declared by
this act.

b. An emergency order shall
set forth the grounds upon which it is issued, including the statement of facts
constituting the alleged emergency necessitating such action.

c. The emergency order
shall be effective immediately upon issuance and service upon the licensee,
registrant, or resident agent of the licensee. The emergency order may suspend,
limit, condition or take other action in relation to the approval of one or
more individuals who were required to be approved in any operation, without
necessarily affecting any other individuals or the licensed casino
establishment. The emergency order shall remain effective until further order
of the director.

d. Within 5 days after
issuance of an emergency order, the division shall cause a complaint to be
filed and served upon the person or entity involved in accordance with the
provisions of this act.

e. Thereafter, the person
or entity against whom the emergency order has been issued and served shall
show cause before the director why the emergency order should not remain in
effect in accordance with the provisions of this act and the regulations
promulgated hereunder.

(cf: P.L.2011, c.19, s.77)

8. Section 1 of P.L.1999,
c.352 (C.5:12-129.1) is amended to read as follows:

1. The holder of any
license issued under P.L.1977, c.110 (C.5:12-1 et seq.), or any person acting
on behalf thereof, shall file a report of any suspicious transaction with the
Director of the Division of Gaming Enforcement. For the purposes of P.L.1999,
c.352 (C.5:12-129.1 et al.), "suspicious transaction" means the
acceptance of cash [or], the redeeming
of chips or markers or other cash equivalents, or a payment to establish
credits in an Internet wagering account involving or aggregating $5,000 if
the licensee or person knows or suspects that the transaction:

a. involves funds derived
from illegal activities or is intended or conducted in order to conceal or
disguise funds or assets derived from illegal activities;

b. is part of a plan to
violate or evade any law or regulation or to avoid any transaction reporting
requirement under the law or regulations of this State or the United States,
including a plan to structure a series of transactions to avoid any transaction
reporting requirement under the laws or regulations of this State or the United
States; or

c. has no business or
other apparent lawful purpose or is not the sort of transaction in which a
person would normally be expected to engage and the licensee or person knows of
no reasonable explanation for the transaction after examining the available
facts, including the background and possible purpose of the transaction.

(cf: P.L.1999, c.352, s.1)

9. (New section) There is
hereby imposed an annual tax on Internet wagering gross revenues in the amount
of 10% of such gross revenues which shall be paid into the Casino Revenue Fund.
The 8% tax on casino gross revenues shall not apply to Internet wagering gross
revenues. The investment alternative tax established by section 3 of P.L.1984,
c.218 (C.5:12-144.1) shall apply to Internet wagering gross revenues, except
that the investment alternative tax on these revenues shall be 5% and the
investment alternative shall be 2.5%, with the proceeds thereof used as
provided in that section.

10. (New section) The
Division of Gaming Enforcement may establish an Office of Internet Wagering to
which it may delegate authority for the administration of Internet wagering
conducted by casino licensees. The division shall be responsible for
recommending regulations concerning Internet wagering for consideration and
possible adoption by the commission. Nothing contained in this section shall
be construed as affecting the authority of the Division of Gaming Enforcement
with respect to all casino gaming activities, including Internet wagering. The
division shall adopt regulations for the implementation and conduct of Internet
wagering that are consistent with regulations governing casino gambling
generally.

11. (New section) Internet
wagering in this State shall be subject to the provisions of, and preempted and
superseded by, any applicable federal law.

Internet wagering in this
State shall be deemed to take place where a casino’s server is located in Atlantic
City regardless of the player’s physical location within this State.

12. (New section) a. No
Internet wagering shall be opened to the public, and no gaming, except for test
purposes, may be conducted therein, until a casino licensee with a valid operation
certificate receives from the division a permit to conduct Internet wagering.
Such permit, valid for one year, shall be issued by the division upon a finding
that the Internet wagering complies in all respects with the requirements of
this act, P.L. , c. (pending
before the Legislature as this bill) and regulations promulgated hereunder,
that the casino licensee has implemented necessary management controls and
security precautions for the efficient operation of Internet wagering, that
casino personnel having duties relating to Internet wagering are licensed for
the performance of their respective responsibilities, and that the licensee is
prepared in all respects to receive and entertain the public.

b. The permit shall include
an itemized list by category and number of the authorized games offered through
Internet wagering.

c. A casino licensee
shall, in accordance with regulations promulgated by the division, file any
changes in the number of authorized games featured through Internet wagering
with the division.

d. It shall be an express
condition of the continued operation of Internet wagering that a casino
licensee shall maintain all books, records, and documents pertaining to the
licensee's Internet wagering operations in a manner and location within this
State approved by the division. All such books, records and documents shall be
immediately available for inspection during all hours of operation in
accordance with the rules of the division and shall be maintained for such
period of time as the division shall require.

e. Subject to the power of
the division to deny, revoke, or suspend permits, any Internet wagering permit
in force shall be renewed by the commission for one year upon proper
application for renewal, completion of a review of Internet wagering operations
for compliance with this act, a review of all required controls and payment of
permit fees and taxes as required by law and the regulations of the division.
Upon renewal of an Internet wagering permit the division shall issue an
appropriate renewal certificate or validating device or sticker which shall be
attached to the Internet wagering permit.

f. Notwithstanding
subsections a. and e. of this section, an Internet wagering permit shall remain
in force only if the casino licensee that holds the permit also holds a valid
operation certificate.

13. (New section) a. The
entire Internet wagering operation, including facilities, equipment and
personnel, shall be located within a restricted area on the premises of the
casino hotel or in a secure facility inaccessible to the public and
specifically designed for that purpose off the premises of a casino hotel but
within the territorial limits of Atlantic City, New Jersey.

b. Facilities used to
conduct and support Internet wagering shall:

(1) be arranged in a manner
promoting optimum security for Internet wagering;

(2) include a closed circuit
visual monitoring system according to specifications approved by the division,
with access on the licensed premises to the system or its signal provided to
the commission or the division;

(3) not be designed in any
way that might interfere with the ability of the division to supervise Internet
wagering operations; and

(4) comply in all respects
with regulations of the division pertaining thereto.

14. (New section) a.
Notwithstanding section 99 of P.L.1977, c.110 (C.5:12-99), each casino licensee
who holds or has applied for a permit to conduct Internet wagering shall submit
to the division a description of its system of internal procedures and
administrative and accounting controls for Internet wagering, including
provisions that provide for real time monitoring of all games, and a
description of any changes thereof. Such submission shall be made at least 30
days before such operations are to commence or at least 30 days before any
change in those procedures or controls is to take effect, unless otherwise
directed by the division. Notwithstanding the foregoing, the internal controls
described in paragraph (3) of this subsection may be implemented by a casino
licensee upon the filing of such internal controls with the division. Each
internal procedure or control submission shall contain both narrative and
diagrammatic representations of the internal control system to be utilized with
regard to Internet wagering, including, but not limited to:

(1) accounting controls,
including the standardization of forms and definition of terms to be utilized
in the wagering operations;

(3) job descriptions and the
system of personnel and chain-of-command, establishing a diversity of
responsibility among employees engaged in Internet wagering operations and
identifying primary and secondary supervisory positions for areas of
responsibility; salary structure; and personnel practices;

(4) procedures for the
establishment of wagering accounts, including a procedure for authenticating
the age of the applicant for a wagering account;

(5) procedures for the
termination of a wagering account by the account holder and the return of any
remaining funds in the wagering account to the account holder;

(6) procedures for the
termination of a dormant account;

(7) procedures for the
logging in and authentication of a wagering account holder in order to enable
the holder to commence Internet wagering, and the logging off of the holder of
the wagering account when the account holder has finished gaming, including a
procedure to automatically log off the holder after a specified period of
inactivity;

(8) procedures for the
crediting and debiting of wagering accounts;

(9) procedures for the
cashing of checks to establish credit in a wagering account; the receipt and
security of cash to establish credit in a wagering account, whether such cash
is received by wire transfer, advance on a credit card or debit card or by
other electronic means approved by the division; and receipt of other
electronic negotiable instruments approved by the division to establish credit
in a wagering account;

(10) procedures for the
withdrawal of funds from a wagering account by the account holder;

(11) the redemption of chips,
tokens or other cash equivalents used in gaming and the pay-off of jackpots;

(12) the recording of
transactions pertaining to Internet wagering;

(13) procedures for the
security of information and funds in a wagering account;

(14) procedures for the
transfer of funds from wagering accounts to the counting process;

(15) procedures and security
for the counting and recordation of revenue;

(16) procedures for the
security of Internet wagering facilities within a restricted area on the
premises of the casino hotel or in a secure facility inaccessible to the public
and specifically designed for that purpose off the premises of a casino hotel
but within the territorial limits of Atlantic City, New Jersey;

(17) procedures and security
standards for the handling and storage of software, computers and other
electronic equipment used to conduct Internet wagering;

(18) procedures and security
standards to protect software, computers and other gaming equipment used to
conduct Internet wagering from tampering by casino employees or any other
person, from a location inside or outside of the casino hotel facility;

(19) procedures for responding
to tampering with software, computers and other gaming equipment used to
conduct Internet wagering or any gaming-related equipment or hardware used in
support of gaming, including partial or complete suspension of Internet
wagering operations or the suspension of any or all wagering accounts when
warranted;

(20) procedures to verify a
player’s physical presence in this State each time a wager is placed; and

(21) procedures to assist
problem and compulsive gamblers.

b. Each casino licensee
shall also submit a description of its system of internal procedures and
administrative and accounting controls for non-gaming operations regarding the
website on which Internet wagering is accessed and a description of any changes
thereto no later than five days after those operations commence or after any
change in those procedures or controls takes effect.

c. The division shall
review each submission required by subsection a. and b. hereof, and shall
determine whether it conforms to the requirements of this act, P.L. , c.
(C. ) (pending before the Legislature as this bill), and to the
regulations promulgated thereunder and whether the system submitted provides
adequate and effective controls for Internet wagering operations of the
particular casino hotel submitting it. If the division finds any
insufficiencies, it shall specify the insufficiencies in writing to the casino
licensee, who shall make appropriate alterations. When the division determines
a submission to be adequate in all respects, it shall notify the casino
licensee. Except as otherwise provided in subsection a. of this section, no
casino licensee shall commence or alter Internet wagering operations unless and
until such system of procedures and controls is approved by the division.

d. It shall be lawful for a
casino licensee to provide marketing information by means of the Internet to
players engaged in Internet wagering and to offer those players incentives to
visit the licensee’s casino in Atlantic City.

15. (New section) a. An
Internet wagering account shall be in the name of a natural person and may not
be in the name of any beneficiary, custodian, joint trust, corporation,
partnership or other organization or entity.

b. An account may be
established by a person submitting an application form approved by the division
along with proof of age. The division shall specify by regulation what types of
proof are sufficient to authenticate age and residency in this State. The
application form shall include the address of the principal residence of the
prospective account holder, an electronic mail address of the prospective
account holder and a statement that a false statement made in regard to an
application may subject the applicant to prosecution.

c. As part of the
application process, the casino licensee shall provide the prospective account
holder with a password to access the wagering account, or shall establish some other
mechanism approved by the division to authenticate the player as the holder of
a wagering account and allow the holder access to the Internet wagering
account.

d. The prospective account
holder shall submit the completed application to the casino licensee. The
licensee may accept or reject an application after receipt and review of the
application and proof of age for compliance with this act, P.L. , c.
(C. ) (pending before the Legislature as this bill).

e. Any prospective account
holder who provides false or misleading information on the application is
subject to rejection of the application or cancellation of the account by the
casino licensee.

f. The licensee shall have
the right to suspend or close any wagering account at its discretion.

g. Any person on the list
established by section 71 of P.L.1977, c.110 (C.5:12-71) of persons who are to
be excluded or ejected from any licensed casino shall not be entitled to
maintain a wagering account.

h. Any of the following
persons shall not be permitted to maintain a wagering account:

(1) the Governor or
Lieutenant Governor;

(2) any State officer or
employee or special State officer or employee;

i. The address provided
by the applicant in the application shall be deemed the proper address for the
purposes of mailing checks, account withdrawals, notices and other materials.

j. A wagering account
shall not be assignable or otherwise transferable.

k. The casino licensee may
at any time declare all or any part of Internet wagering to be closed for
wagering.

16. (New section) a.
Credits to an Internet wagering account shall not be made except as provided by
this subsection.

(1) The wagering account
holder’s deposits to the wagering account shall be submitted by the account
holder to the casino licensee and shall be in the form of one of the following:

(a) cash given to the casino
licensee;

(b) check, money order,
negotiable order of withdrawal, or wire or electronic transfer, payable and
remitted to the casino licensee;

(c) charges made to an
account holder’s debit or credit card upon the account holder's direct and
personal instruction, which instruction may be given by telephone communication
or other electronic means to the casino licensee by the account holder if the
use of the card has been approved by the casino licensee; or

(d) any other method
approved by the division.

(2) When an account holder
wins an account wager on a game, the casino licensee shall pay to the holder
Internet chips or tokens or other cash equivalents in the appropriate amount
pursuant to the rules of that game for that particular type of wager. When
the account holder logs off or cashes out the Internet chips, tokens or other
cash equivalents, the casino licensee shall credit the holder's wagering
account in the amount of Internet chips, tokens or other cash equivalents
cashed in.

(3) The casino licensee
shall have the right to credit a wagering account as part of a promotion
scheme.

(4) The casino licensee
shall have the right to refuse, for any valid reason, all or part of any wager
or deposit to the account.

(5) Funds deposited in the
account shall not bear interest to the account holder.

b. Debits to an Internet
wagering account shall not be made except as provided by this subsection.

(1) When an account holder
logs onto a wagering account and exchanges account funds for Internet chips,
tokens or other cash equivalents, the licensee shall debit the holder's account
in the amount of funds exchanged. Upon receipt by a casino licensee of an
account wager or an account purchase order, the casino licensee shall debit the
account holder’s Internet chips, tokens or other cash equivalents in the amount
of the wager or purchase.

(2) A casino licensee may
authorize a withdrawal from a wagering account when the account holder submits
to the casino licensee:

(a) proper identification;

(b) the correct
authentication information for access to the account; and

(c) a properly completed and
executed withdrawal on a form approved by the division.

Upon receipt of a properly
completed and executed withdrawal form, and if there are sufficient funds in
the account to cover the withdrawal, the licensee shall send, within three
business days of receipt, a check payable in the amount requested to the holder
at the address specified in the application for the wagering account or shall
transmit payment to the account holder electronically as approved by the
division by regulation.

a. The account wager shall
be placed directly with the casino licensee by the holder of the wagering
account and the casino licensee has verified the account holder’s physical
presence in this State.

b. The account holder
placing the account wager shall provide the casino licensee with the correct
authentication information for access to the wagering account.

c. A casino licensee may
not accept an account wager in an amount in excess of funds on deposit in the
wagering account of the holder placing the wager. Funds on deposit include
amounts credited under this act, P.L. c. (C. ) (pending before the
Legislature as this bill), and in the account at the time the wager is placed.

18. (New section) All
amounts remaining in wagering accounts inactive or dormant for such period and
under such conditions as established by regulation by the division shall be
paid 50% to the casino licensee and 50% to the casino control fund. Before
closing a wagering account pursuant to this section, the casino licensee shall
attempt to contact the account holder by mail, phone and computer.

19. (New section) a. The
casino licensee shall establish a log in procedure for a holder of a wagering
account to access Internet wagering. Part of the log in procedure shall be the
provision by the account holder of the appropriate authentication information
for access to the wagering account. The casino licensee shall not allow an
account holder to participate in gaming before logging in and providing the
proper authentication information to access the holder's wagering account.

b. Upon log in, the holder
of a wagering account shall have the option to exchange any amount of funds in
the wagering account to Internet chips, tokens or other cash equivalents, to be
used for Internet casino gaming.

c. Upon logging off, the
current amount of the holders' Internet chips, tokens or other cash equivalents
shall be credited to the holder's wagering account.

20.(New section) The
casino licensee shall provide to a holder of a wagering account who is logged
in to his or her wagering account access to a display of all of the following
information:

a. the current amount of
money in the holder's account, including the current amount of the holder's
Internet chips, tokens or other cash equivalents;

b. the amount of money the
account holder has won or lost on Internet wagering since the account was
established;

c. the amount of money the
account holder has won or lost on during the current gaming session, when a
gaming session begins at log on and ends at log off;

d. a detailed accounting of
all other Internet gaming sessions, when a session begins at log on and ends at
log off, including time and date of log on and log off and the amount of money
won or lost on gaming and the amount of money spent from the account on
merchandise or services; and

e. the complete text of
the rules of the division regarding games and the conduct of Internet wagering,
pay-offs of winning wagers, an approximation of the odds of winning for each
wager, and such other advice and information to the account holder as the division
shall require.

21. (New section) In order
to assist those persons who may have a gambling problem, a casino licensee
shall:

a. cause the words
"If you or someone you know has a gambling problem and wants help, call
1-800 GAMBLER," or some comparable language approved by the division,
which language shall include the words "gambling problem" and
"call 1-800 GAMBLER," to be prominently and continuously displayed to
any person visiting or logged onto Internet wagering;

b. provide a mechanism by which
a holder of a wagering account may establish the following controls on wagering
activity through the wagering account:

(1) a limit on the amount of
money lost within a specified period of time and the length of time the holder
will be unable to participate in gaming if the holder reaches the established
loss limit;

(2) a limit on the maximum
amount of any single wager on any game; and

(3) a temporary suspension
of gaming through the account for any number of hours or days.

The casino licensee shall not
send gaming-related mail or electronic mail to an account holder while gaming
through his or her wagering account is suspended. The casino licensee shall
provide a mechanism by which an account holder may change these controls,
except that while gaming through the wagering account is suspended, the account
holder may not change gaming controls until the suspension expires, but the
holder shall continue to have access to the account and shall be permitted to
withdraw funds from the account upon proper application therefor; and

c. establish a system by
which a holder of a wagering account who sustains continuous losses of a
sufficient level according to standards set by the division by regulation, will
have sent to his or her postal address and electronic mail address a list
detailing all gaming winnings and losses through the wagering account, contact
information for assistance with identifying a potential gambling problem and
other information about gambling problems and compulsive gambling deemed appropriate
by the division.

22. (New section) a. Except
as provided in this section, no casino licensee or any person licensed under
P.L.1977, c.110 (C.5:12-1 et seq.) and no person acting on behalf of, or under
any arrangement with, a casino licensee or other person licensed under
P.L.1977, c.110, shall:

(1) cash any check, make any
loan, or otherwise provide credit to any person for the purpose of crediting an
Internet wagering account; or

(2) release or discharge any
debt, either in whole or in part, or make any loan which represents any losses
incurred by any account holder in gaming activity through Internet wagering,
without maintaining a written record thereof in accordance with the rules of
the division.

b. Notwithstanding section
101 of P.L.1977, c.110 (C.5:12-101), no casino licensee or any person licensed
under P.L.1977, c.110 (C.5:12-1 et seq.) and no person acting on behalf of, or
under any arrangement with, a casino licensee or other person licensed under
P.L.1977, c.110, may accept a check, other than a recognized traveler's check
or other cash equivalent from any person for the purpose of crediting an
Internet wagering account unless:

(1) the check is made
payable to the casino licensee;

(2) the check is dated, but
not postdated;

(3) the check is transmitted
to the casino licensee and received by the licensee in a manner approved by the
division and is exchanged for credits on the Internet wagering account
established by the drawer of the check; and

(4) the regulations
concerning check cashing procedures are observed by the casino licensee and its
employees and agents.

23. (New section) Any person
who offers games into play or displays such games through Internet wagering
without approval of the division to do so is guilty of a crime of the fourth
degree and notwithstanding the provisions of N.J.S.2C:43-3, shall be subject to
a fine of not more than $25,000 and in the case of a person other than a
natural person, to a fine of not more than $100,000 and any other appropriate
disposition authorized by subsection b. of N.J.S.2C:43-2.

24. (New section) a.
Notwithstanding section 46 of P.L.1991, c.182 (C.5:12-113.1), any person who
knowingly tampers with software, computers or other equipment used to conduct
Internet wagering to alter the odds or the payout of a game or disables the
game from operating according to the rules of the game as promulgated by the
division is guilty of a crime of the third degree and notwithstanding the
provisions of N.J.S.2C:43-3, shall be subject to a fine of not more than
$50,000 and in the case of a person other than a natural person, to a fine of
not more than $200,000 and any other appropriate disposition authorized by
subsection b. of N.J.S.2C:43-2.

b. In addition to the
penalties provided in subsection a., an employee of the casino licensee who
violates this section shall have his or her license revoked and shall be
subject to such further penalty as the division deems appropriate.

c. In addition to the
penalties provided in subsection a., a casino licensee that violates this
section shall have its permit to conduct Internet wagering revoked and shall be
subject to such further penalty as the division deems appropriate.

25. (New section) a. Any
person who knowingly offers or allows to be offered any Internet game that has
been tampered with in a way that affects the odds or the payout of a game or
disables the game from operating according to the rules of the game as
promulgated by the division is guilty of a crime of the third degree and
notwithstanding the provisions of N.J.S.2C:43-3, shall be subject to a fine of
not more than $50,000 and in the case of a person other than a natural person,
to a fine of not more than $200,000 and any other appropriate disposition
authorized by subsection b. of N.J.S.2C:43-2.

b. In addition to the
penalties provided in subsection a., an employee of the casino licensee who
knowingly violates this section shall have his or her license suspended for a
period not less than 30 days.

c. In addition to the
penalties provided in subsection a., a casino licensee that violates this
section shall have its permit to conduct Internet wagering suspended for a
period not less than 30 days.

26. (New section) a. No
person under the age of 21 shall be permitted to maintain an Internet wagering
account. Any casino licensee or employee of a casino licensee who allows a
person under the age of 21 to maintain a wagering account is guilty of a crime
of the fourth degree and subject to the penalties therefor; except that the
establishment of all of the following facts by a licensee or employee allowing
any such underage person to maintain an account shall constitute a defense to
any prosecution therefor:

(1) that the underage person
falsely represented during the application process for an Internet wagering
account that he or she
was at least 21 years of age; and

(2) that the establishment
of the Internet wagering account was made in good faith, relying upon such
representation, and in the reasonable belief that the underage person was actually
21 years of age or older.

b. In addition to the
penalties provided in subsection a. of this section, an employee of the casino
licensee who violates the provisions of this section more than once shall have
his or her license revoked.

c. In addition to the
penalties provided in subsection a. of this section, a casino licensee that
violates the provisions of this section more than once shall have its permit to
conduct Internet wagering revoked.

27. (New section) a. The
division shall, by regulation, establish annual fees for the issuance or
renewal of Internet wagering permits. The issuance fee shall be based upon the
cost of investigation and consideration of the license application and shall be
not less than $200,000. The renewal fee shall be based upon the cost of
maintaining enforcement, control and regulation of Internet wagering operations
and shall be not less than $100,000.

b. The Attorney General
shall certify to the division actual and prospective costs of the investigative
and enforcement functions of the division, which costs shall be the basis,
together with the operating expenses of the division, for the establishment of
annual permit issuance and renewal fees.

c. A nonrefundable deposit
of at least $100,000 shall be required to be posted with each application for
an Internet wagering permit and shall be applied to the initial permit fee if
the application is approved.

d. In addition to the
permit issuance and renewal fees, a casino licensee with an Internet wagering
permit shall pay annually to the division $100,000 to be deposited into the
State General Fund for appropriation by the Legislature to the Department of Human
Services, $85,000 of which shall be allocated to the Council on Compulsive
Gambling of New Jersey and $15,000 of which shall be used for compulsive
gambling treatment programs in the State.

28. (New section) No
organization or commercial enterprise, other than a casino located in Atlantic
City that has been issued a permit to conduct Internet wagering and has located
all of its equipment used to conduct Internet wagering, including computers,
servers, monitoring rooms, and hubs, in Atlantic City, shall make its premises
available for placing wagers at casinos using the Internet or advertise that
its premises may be used for such purpose. An organization or commercial
enterprise that is determined by the division to have violated the provisions
of this section shall be subject to a penalty of $1,000 per player per day for
making its premises available for placing wagers at casinos using the Internet
and of $10,000 per violation for advertising that its premises may be used for
such purpose.

29. This act shall take
effect immediately.

STATEMENT

This bill authorizes Internet
wagering at Atlantic City casinos to enable New Jersey residents to place
wagers on casino games via the Internet.

Specifically, the bill
provides:

·all games, including poker, which may be played at a casino, as
well as variations or composites thereof, may be offered through Internet wagering;

·all equipment used by a licensee to conduct Internet wagering,
including but not limited to computers, servers, monitoring rooms, and hubs, must
be located either in a restricted area on the premises of the casino hotel or
in a secure facility inaccessible to the public and specifically designed for
that purpose off the premises of a casino hotel but within the territorial
limits of Atlantic City and all Internet wagers will be deemed to be placed
when received in Atlantic City by the licensee regardless of the player’s
physical location within this State; any intermediate routing of electronic
data in connection with a wager will not affect the fact that the wager is
placed in Atlantic City;

·in order to participate in Internet wagering, a player must be
physically present in New Jersey whenever a wager is placed by that player;

·each licensee that conducts Internet wagering must be able to
verify that a player is physically present in New Jersey when placing a wager;

·the division must confirm on a continuing basis that a licensee’s
equipment is able to verify that the player is physically present in this State
when placing a wager;

·Internet wagering in this State will be subject to the provisions
of, and preempted and superseded by, any applicable federal law;

·there is imposed an annual tax on Internet wagering gross
revenues in the amount of 10% of such gross revenues which will be paid into
the casino revenue fund; the 8% tax on casino gross revenues will not apply to
Internet wagering gross revenues; and the investment alternative tax will apply
to Internet wagering gross revenues, except that the investment alternative tax
on these revenues will be 5% and the investment alternative will be 2.5%, with
the proceeds thereof used as provided by law;

·the Division of Gaming Enforcement may establish an Office of
Internet Wagering to which it may delegate authority for the administration of
Internet wagering conducted by casino licensees; the division would be
responsible for recommending regulations concerning Internet wagering for
consideration and possible adoption by the commission; this would not affect
the authority of the Division of Gaming Enforcement with respect to all casino
gaming activities, including Internet wagering;

·the application process for a licensed casino to obtain a permit
to establish Internet wagering, with the permit valid for one year and subject
to renewal. As part of the application process, a casino licensee must submit
a description of its system of internal procedures (including security
procedures) and administrative and accounting controls for Internet wagering,
including provisions that provide for real time monitoring of all games. A
casino licensee must also submit its gaming software and other Internet
wagering equipment to the Division of Gaming Enforcement for testing to ensure
compliance with technical standards for such equipment set by the commission;

·procedures for the crediting and debiting of a wagering account;

·it will be lawful for a casino licensee to provide marketing
information by means of the Internet to players engaged in Internet wagering
and to offer those players incentives to visit the licensee’s casino in Atlantic
City;

·required features of Internet wagering to assist the wagering
account holder;

·required features to assist problem gamblers and potential
problem gamblers;

·penalties for violations of the provisions of the bill;

·an annual fee for Internet wagering permit holders for the
initial permit and permit renewal to cover the costs of regulation by the
commission and the division, with the initial fee to be at least $200,000 and
the renewal fee to be at least $100,000; and

·an annual fee for Internet wagering permit holders of $100,000 to
be allocated to programs to prevent compulsive gambling and to assist
compulsive gamblers.

Except as otherwise provided
in the bill, a licensed casino's Internet wagering operation would be subject
to the existing provisions of the Casino Control Act and the regulations
promulgated thereunder, including, but not limited to:

·the licensure of all employees with gaming-related duties or
responsibilities;

·penalties for a violation of the act; and

·supplemental sanctions deemed appropriate by the commission for
violations.

The division will adopt
regulations for the implementation and conduct of Internet wagering that are
consistent with regulations governing casino gambling generally.

The bill provides that no
organization or commercial enterprise, other than a casino located in Atlantic
City that has been issued a permit to conduct Internet wagering and has located
all of its equipment used to conduct Internet wagering, including computers,
servers, monitoring rooms, and hubs, in Atlantic City, would be able to make
its premises available for placing wagers at casinos using the Internet or
advertise that its premises may be used for such purpose. Violations would be
punishable by a penalty of $1,000 per player per day for making a premises
available for placing wagers at casinos using the Internet and of $10,000 per
violation for advertising that a premises may be used for such purpose.

The sponsors note that, in State
v. Trump 160 N.J. 505 (1999), a majority of the New Jersey
Supreme Court adopted a purposive reading of Article IV, Section 7, paragraph
2, subparagraph D, of the State Constitution. The court clearly indicated that
the purposes of the provision were "a rejuvenated tourist industry,
increased employment, capital investment and much needed urban
redevelopment," and "to raise revenue to benefit senior and disabled
citizens." Trump, 160 N.J. at 516.